Investing in real estate for the long term requires credit, unless you can pay all cash. Even if you could, there would come a time that the money would run out.

Even the wealthiest and most sophisticated investors use credit. The better your credit score the better the rate, terms and higher loan to value (ltv) you can qualify for. With rates as low as they are you should be buying as many properties as you can handle because you can lock in thirty year fixed rates that allow you to have great cash flow.

Please remember that nothing will make your credit score jump one hundred points overnight but these are things that if you implement them, over time you will see a significant change in your score. When a credit report is pulled the score that shows up is simply a snapshot in time. It is the score represented by the information on your report on that very day.

The first thing you should do is to obtain a copy of your credit report. By doing this you will see exactly where you are so you can determine where you want or need to be. Here are the eleven ways to raise your score:

  1. Pay all of your bills on time. This is especially true for your mortgage. When applying for a mortgage loan the underwriters look at pay history on your current mortgage or mortgages more than any other accounts. I’m not saying be late on the other bills, I’m just saying that if there comes a time that you have to make a choice of paying the credit card or the mortgage payment, always pay the mortgage.
  2. Close accounts that you don’t need. I don’t mean to close accounts where you still have outstanding balances just so you can’t charge anymore. This may even hurt your score. What I mean is that as soon as you can pay off an account and you can do without it, contact the creditor and have them close the account.
  3. Don’t open any new accounts that you don’t need. This may actually lower your score by having too many open accounts which is one of the items used to determine scores.
  4. Don’t co-sign for anyone. I meet lots of people that have let someone use their credit to obtain a loan, usually to buy a car. I don’t recommend it. If you must help a son or daughter buy a car or get a credit card make sure that YOU receive the payments from them and YOU send the payments to the creditor so that YOU know for sure that the bill is being paid each month on time.
  5. Keep some credit cards and use them wisely. Someone without credit cards could have a lower score than someone with them. You need to keep one or two cards and use them responsibly. Pay off the balance each month if you can.
  6. Don’t open too many accounts too quickly. By doing this it appears that you may be setting yourself up for failure to a lender. New accounts also will lower your score until they become seasoned with a good pay history.
  7. Check your credit report for mistakes. There could be items on your report that are not yours especially if you have a common name or you are a Jr.
  8. Don’t shop for a car or anything else where they will be shopping your loan. Many car dealers will send your application to numerous lenders. Each credit inquiry will drop your score by a few points. A few points may or may not make a difference depending on your current score. Ordering your own report from a repository will not affect your score.
  9. Keep credit card balances low. If you balance is at or near your limit this will lower your score.
  10. Don’t consolidate credit cards. Moving consumer debt around will not help in the long run. Simply pay down on the ones with the highest rate first.
  11. Pay off any outstanding derogatory items on your report. Even if they are old it will look better to have a zero balance.

I hope this has helped. There are three different credit repositories, Equifax (800-685-1111), Transunion (800-888-4213) and Experian (866-200-6020). It is a good idea to get a copy from all three. Even though Equifax is the most used in the southeast and they are based in Atlanta, most lenders will look at all three and use the middle score of the three to determine whether or not you can qualify for the loan program requested.